What responsibilities are imposed on property owners in Israel? How much will you have to spend on taxes and fees, as well as the payment of utilities, perhaps the management company? How to rent a house for rent and how much can you earn on it? The answers to these and many other questions about the content of real estate in Israel, read our material.
The cost of maintaining real estate in Israel consists of several components: utility payments, maintenance fees for the building and arnony – municipal property tax. Utility payments depend on consumption, all charges are based on meter readings. Arnona is also not a fixed amount – it depends on the area of the apartment, the city and the area in which the house is located.
Property owners in Israel pay a municipal fee – arnon. The tax depends not only on the area of real estate, but also its location. Therefore, in different cities of the country it can differ significantly. In large cities, arnon is higher, in smaller and remote ones – lower.
You can pay municipal tax in two ways: divide the total amount into six parts and pay it every two months, or pay the whole amount at a time. From a financial point of view, it is more profitable to pay tax in one payment, since in this case the amount will be less. On average, about $ 60 (200 shekels) is charged per month as part of the municipal tax.
Some categories of citizens have the right to qualify for discounts on arnon.
The House Committee in Israel is the equivalent of the well-known Association of Owners. Most Israelis and foreigners have apartments in their shared ownership. According to the Israeli law “On real estate”, all co-owners of apartments in the house are obliged to hold a general meeting and elect the House Committee (vaad-ha-bait), which will later take care of joint property, choose a service company. Members of the House Committee are required to submit a report on activities and expenses to the general meeting every six months.
At the general meeting, the amount of payment for each of the co-owners of general house expenses is established. Depending on the quality of the house and the area in which it is located, the amount of monthly fees ranges from 50 (about $ 15) to 500 shekels (about $ 140). As a rule, the payment is charged every month, regardless of whether the apartment is empty or used. Responsibility for payment is the owner of the apartment, even if the tenant is a tenant. And if the latter does not make payments on time, then the owner must solve the problem.
House committee has no right to provide a discount on payment to any of the owners of housing. Since the reduction of the fee is one, it is automatically refunded by increasing the fee for all other owners. Therefore, such a decision can be made only at a general meeting of owners. At the same time, the House Committee can independently increase or decrease the amount of the established payment up to 15%, depending on the circumstances. For example, with an increase / decrease in prices for services, the abolition of watering the garden / lawn and so on.
- In accordance with Art. 58 of the Law “On Real Estate” payment of contributions to the House Committee is a mandatory fee for residents.
As in most countries, electricity, water and gas (if the house has a centralized gas supply) are paid by the meter. Therefore, the bill depends on the needs and habits of the owner of the property.
Electricity charges are usually the largest expense. On average, it is about 0.5 shekels ($ 0.15) per 1 kW * h. Of course, if you use electricity sparingly, you can meet in 100-200 shekels (about $ 30-55) per month. But taking into account the hot climate and the need to use air conditioners in addition to everything, the average bill for a family is 400-500 shekels ($ 100-135). In winter, a little less, despite the fact that the apartment is heated, if necessary, with the help of air conditioning.
The electricity bill is paid every two months, so all the above amounts are multiplied by two.
In Israel, water is saved. Here it is quite common practice to do the minimum water pressure while you are soaping in the shower or foaming detergent on dirty plates. That is why big bills for it are rare here. But if you are used to pouring water in vain, then the amount of expenditure may come close to the size of electricity bills.
In Israel, established quotas for water consumption. The consumption rate for individuals is 3.5 m³ per month per person and not less than 7 m³ per housing unit. Water consumption that exceeds the quota is paid at a higher rate. Accordingly, there are “low” and “high” water tariffs:
- 6.5 shekels ($ 1.7) per 1 m³
- 12.3 shekels ($ 3.36) per 1 m³
The bill comes every two months and the average is 50 shekels per person. If we are talking about a family, the amount rises to 200-250 shekels.
In Israel, gas is flown into homes by private companies. Therefore, the bill, which will be received once every 2 months, will include not only the cost of the gas itself, but also the payment for the services of the supplier. Company services cost about 15-30 shekels per month. Gas tariff – 11-38 shekels per cubic meter. The average bill for 2 months is about 100 shekels (about $ 30).
If the house does not have a centralized gas supply, then gas in cylinders is often used. A cylinder of 12 kg lasts an average of 6-8 months. His price – 150 shekels.
Internet, TV, telephone
The largest telecom operators in Israel are Cellcom, Orange and Pelephone. Monthly fee for unlimited mobile communications and 1-3 gigabytes of Internet – about 100 shekels.
Home phone is also not a thing of the past, but it often goes “in package” and is paid for along with home Internet. It takes 150-200 shekels per month. The TV package will add to the bill from 120 to 250 shekels per month.
Real estate insurance
Property owners in Israel choose themselves to insure their housing or to save on it. In the case of insurance in the amount of $ 30,000 to $ 60,000, contributions will be $ 180- $ 300 per year.
* You can pay utility bills in Israel in two ways. In the old manner – in the post office, or use the modern benefits of civilization – pay by card via the Internet on the website of the local municipality.
Example of calculating taxes and utility payments
Apartment area of 100 square meters. m near the city center costing $ 465,000. A family of three people lives for 3 months a year.
- Annual tax (estimated) $ 720
- House committee (house maintenance) $ 800
- Water for 3 people (about $ 50 per month) $ 150
- Electricity, including heating (about $ 100 per month) $ 300
- Gas (with centralized supply) $ 40-50
- Insurance for an apartment (optional) $ 150
Total expenses per year: $ 2160
The state does not limit foreigners in earnings on the delivery of real estate. Thus, the authorities stimulate the rental market, which contributes to the solution of the housing issue.
Do not forget that with the income received, you must pay taxes in Israel. The system of charging state fees is quite complicated. In short, earning 6,000 shekels on rent, you will have to give the state approximately 1,980 shekels. More information about the calculations of income tax on rent can be found on the website of the Israeli tax service (Hebrew site).
On average, the monthly cost of rental housing in Israel:
- One bedroom apartment in the city center – from 2500 to 3800 shekels ($ 690-1050)
- Studio apartment in residential areas of the city – from 1900 to 3200 shekels ($ 520-880)
- Two-bedroom apartment in the city center – from 4,500 to 6,700 shekels ( $ 1200-1850)
- Two-bedroom apartment in residential areas of the city – from 3200 to 5500 shekels ( $ 880-1500)
The yield from rental housing depends on its location and the quality of real estate, but the national average is about 4-5% per annum.
In order to pay taxes on time, a “communal flat”, to successfully rent housing and receive payment, it is most convenient to contact the management company (MC).
Typically, companies that manage real estate in Israel, take for their services 10-15% of the rental amount. Their work includes: cleaning and maintenance of the apartment, the elimination of minor breakdowns, advertising the apartment, settling and evicting customers, charging them money.
Cost of living in the country
Israel is a prosperous country. According to the Numbeo ‘s Cost of Living Index , it ranks 11th in the world in terms of the cost of living.
At the end of 2017, the average salary in Israel after tax deduction was about 10,000 shekels (about $ 2,700), which is quite a decent amount. But given the prices of goods and services, rental and maintenance of housing, it becomes clear that not everyone can afford pleasant excesses.
Property For Sale
The Israeli real estate market is focused primarily on the domestic buyer. Although foreigners, especially wealthy ones, play a significant role on it and are happy to acquire local housing. After all, it is constantly growing in price.
Despite the slowdown in growth – in recent years no more than 1-1.5% per annum – the country’s real estate market remains in a positive trend. And it speaks about its stability and prospects of investments in local real estate.
Foreigners are exempt from paying property tax on the sale of a single property and its subsequent sales every four years.
Other costs when selling
In Israel, the services of a realtor are paid by the party that hired him. Therefore, it is possible that this side will be the seller, who urgently needs to sell the apartment. The standard rate is 1-2% of the transaction amount + VAT. The same amount will have to be paid for the services of a lawyer, without which there is not a single transaction in the country.
Summary: remember this
- Owners pay a municipal fee – arnon. The tax depends not only on the area of real estate, but also its location. Therefore, in different cities of the country it can differ significantly.
- The analogue of the Association of Owners in Israel is the House Committee, which has a wide range of powers, ranging from deciding whether to water or not water lawns at home, and ending with the choice of a service company with certain rates for providing services.
- Profitability from rental housing depends on its location, but the national average is about 4-5% per annum.
- The cost of real estate in Israel is growing steadily. Although in recent years this process has slowed down significantly – up to 1-1.5% per year.